Norwegian Refugee Council Reports Climate Crisis In Iraq Getting Worse

Farmer in Baaj, Ninewa looking at what used to be farmland (Norwegian Refugee Council)

Iraq’s environmental crisis continues to worsen with no end in sight. The Norwegian Refugee Council just released a new report which provides more details on the situation.

Review The Iraqi Revolution Of 1958, The Old Social Classes Revisited

Fernea, Robert & Louis, Wm. Roger, The Iraqi Revolution Of 1958, The Old Social Classes Revisited, London, New York: I.B. Tauris, 1991

 

Hanna Batatu’s The Old Social Classes and the Revolutionary Movements of Iraq is one of the most famous and thorough books on Iraqi History. It covers the emergence of the Iraqi state and society from British colonialism to the 1960s. This release The Iraqi Revolution Of 1958, The Old Social Classes Revisited came out of a conference in 1991 where papers were submitted to discuss what led to the 1958 coup in Iraq and its aftermath using Batatu’s work as the basis for their analysis. It is remarkable because every chapter is interesting something that is usually challenging to find in an anthology. The authors cover a variety of issues from British, American and Soviet policy towards the monarchy before its overthrow to the coup’s connections to other political movements in the Middle East to tribes and the development of Iraqi politics and culture. Some are straight forward histories while others are more theoretical. Each provides a very interesting look at how Iraq was transformed during this important period.

Environmental Changes Forcing More Rural Iraqis To Migrate To Urban Areas

(IOM)

The International Organization for Migration (ION) recently released survey results on the continued migration of Iraqis out of rural areas because of their changing environment. It found that over 68,000 people have been displaced in southern Iraq across 10 provinces.

U.N. Iraq Entering 3rd Year of Drought Along With Increasing Food Import Prices

(AP)

The United Nation’s World Food Programme recently released a report on how a third year of drought is affecting Iraq’s economy.

Review The Making of Iraq 1900-1963, Capital, Power and Ideology

Haj, Samira, The Making of Iraq 1900-1963, Capital, Power and Ideology, Albany: State University of New York Press, 1997

 

The Making of Iraq 1900-1963, Capital, Power and Ideology is a detailed academic book on how the development of Iraq’s economy under the Ottomans and then the British created a political system that would eventually bring down both the monarchy and General Abd al-Karim Qasim’s government. The author Samira Haj argues that the agriculture system dominated by large estates distorted the economy and limited the government which created conditions for a coup in 1958 led by General Qasim. The forces that backed him would eventually split over ideology and class and led to his demise as well. Haj emphasizes that internal dynamics rather than foreign influence or international capitalism led to these changes

Review A Short History of Iraq, Second Edition

Abdullah, Thabit, A Short History of Iraq, Second Edition, Harlow: Pearson Education Limited, 2011

 

Professor Thabit Abdullah wrote a short and concise book in A Short History of Iraq. It starts with the Arab conquest of what would become Iraq in the 7^th Century and goes up to U.S. occupation. Throughout each period he talks about the political and economic developments with a bit on culture as well. Abdullah emphasizes that Iraq has constantly seen conflict and divisions but also periods of stability and growth.

Baathist Origins Of Iraq’s Agriculture System

(AFP)

Like the rest of the economy agriculture is facing a crisis in Iraq. That’s because the system is dominated by the state, which is not making enough money to pay its bills. This is a legacy of the Baathist system implemented in the 1970s which placed the government at the center of all transactions in the farming business.

Iraq Govt Not Dealing With Declining Farming And Environmental Problems Threatening Food Security

(AP)

Iraq’s food situation is running into increasing problems. Its farm sector is declining and running into more difficulties due to government interventions and environmental changes. That is increasing dependency upon imports. At the same time the most vulnerable Iraqis are facing food shortages. Baghdad has worked with the United Nations and others to try to come up with plans to address these issues, but is not funding them to make them successful. That means these issues will continue to worsen.

Mosul Campaign Day 121, Feb 14, 2017

The Islamic State launched more attacks upon liberated east Mosul. 24 IS fighters who crossed the Tigris River into southeast Mosul at night were stopped by members of the Golden Division, and were eventually killed after a gun battle. Mortar fire killed 1 civilian and wounded 2 more. The government has been forming local Hashd groups to help secure the city. A commander of one such unit told Voice of America that the insurgents were attempting river attacks almost every night. The same report quoted a soldier who said drone strikes were wounding up to 20 people per day. Surveillance drones were also constantly flying over the city trying to sport targets for mortar fire. There is still the threat of sleeper cells as well. East Mosul remains insecure as a result of these constant attacks.

Iraq’s Economy Collapsing Under Pressure of Security Crisis

One of the untold stories of the fighting in Iraq is the effect it is having upon the country’s economy. Almost two million internally displaced people, the loss of agricultural land in northern Iraq, foreign investors being scared off, the decline in trade, the collapse of several internal markets, and depleted financial reserves have all been reported in the press. This came on top of the fact that the 2014 budget was never passed due to ex-Premier Nouri al-Maliki’s disputes with his political rivals, which is crippling in a state run system like Iraq’s. All together this points to an economy in crisis.

There are all kinds of stories about the problems Iraq’s economy is suffering from. The Baghdad provincial council told Al Mada that Turkish and Arab countries were pulling out when the insurgent summer offensive began in June. It warned that this would affect services and projects. The real estate and car markets were said to have collapsed as well. Hundreds of acres of farmland have been lost to the insurgency. Al Monitor reported that 900,000 acres of wheat and barley crops were lost in Salahaddin alone after insurgents seized the northern and eastern sections of the governorate. Agriculture is a major employer in Iraq. The violence has disrupted trade. One expert said that there was a 60-70% decline in imports due to the on going fighting. Many of the routes to Jordan, Syria and Turkey have been cut off. There has also been a disruption in the distribution of goods within the country. These have both contributed to raising prices for many goods. Finally, nearly two million people have been displaced since the beginning of the year. These people have lost their jobs. There are fears that unemployment and poverty have all sky rocketed as a result. These all point to an economy coming apart as markets, goods, and investment have all been disrupted.

Iraq is also facing a financial crisis. The 2014 budget was never passed as former Premier Maliki used it as a weapon against his opponents before the parliamentary elections. Experts and parliamentarians said that was slowing the economy even before the summer offensive, and some even warned of a recession in May. The lack of a budget meant that projects have come to a halt, public workers, the largest group in the economy have not been paid, which has trickled down to increased unemployment and cash shortages. When Mosul fell the situation got worse as Maliki used up the general budget and money from the Development Fund for Iraq to pay for the war, which was costing up to $50 million a day. Parliament’s finance committee said that the Fund was down from $10 billion to $3 billion. The same committee claimed that the ex-prime minister spent all the oil revenues over the last seven months as well. Iraq has a state-run economy so passage of the budget is crucial to keeping the country running. Things were bad already as development was coming to a halt due to a lack of a budget, and now the fall of northern Iraq has made the situation worse as much of the available funds have gone towards security.

The insurgency is not only costing Iraqis their lives, but their livelihood as well. The economy is coming apart under the weight of the violence. Foreign businesses are being scared away, trade has atrophied, unemployment is up and more. On top of that there is still no budget and Iraq’s reserves have been depleted. The country’s economy only started turning around after the 2003 invasion when security was improved with the 2007 Surge. The same will happen now as no development can happen without stability, which looks to be years away.

SOURCES

Adel, Shaymaa, “Number of Iraqis living in poverty at 30%,” Azzaman, 8/31/14

Azzaman, “Iraq edges closer to Iran as fighting with Islamic State intensifies,” 9/4/14

Al-Jaffal, Omar, “Fighting robs Iraqi farmers of harvest,” Al Monitor, 9/26/14

Al Mada, “Baghdad Council: Arab and Turkish companies withdrew from the capital as a result of threats of militias and gangs,” 6/29/14

- “Depression dominates real estate market and merchandise..and record high unemployment indicators,” 5/18/14

- “Iraq war bill plagues the economy and raises unemployment to 25%,” 9/7/14

- “Iraq’s oil revenues are spent over last 7 months..and the salaries of Kurdistan subject to the balance of cash,” 10/2/14

- “Only three billion in Iraqi oil fund run by the government confirms Parliament, down 70% from its average,” 9/20/14

Iraq’s New 5-Year Development Plan Sets Nice Goals But Will Have Little Effect Upon Policy

Iraq just issued its new 5-year National Development Plan (NDP). Its main goal is to use the country’s vast oil wealth to diversify the economy towards agriculture, industry, and other sectors. It has the same basic goals as the previous plan. The problem is that the NDP is not a real path of action for Baghdad to follow rather it just sets broad goals for Iraq. More importantly, the government does not pay attention to it when passing legislation or making policy, which means it has no real affect upon the future of the country.

September 2013, Iraq’s latest National Development Plan (NDP) was announced. Its main focus is upon diversifying the economy away from oil dependence. Deputy Premier Hussein Shahristani said that the country would use its oil revenues to build up industry. The NDP also emphasizes developing building and services, agriculture, education, transportation and communication, and energy. In farming for example, it wants Iraq to reduce imports and move towards self-sufficiency. It calls for wheat production to be expanded to 6 million tons and barley to 1.2 million tons by 2017. By doing so, it hopes to alleviate some of the differences between rural and urban areas. These goals are to be achieved by $357 billion in investment over the next five years. That would be just over 50% of predicted oil revenues during that same time period. Since Iraq is the most oil dependent country in the world, developing other industries is a necessity. Other sectors of the economy have witnessed a drastic decline since 2003 due to some ill conceived policies implemented by the Americans and Iraqis. Dependence upon petroleum also has wide ranging effects upon politics and society such as breaking the social contract between the public and the government, decreasing the competiveness of other industries, and causing corruption. The NDP recognizes these negatives that derive from the natural resource curse, and advocates for an alternative path for the country to follow.

The problem for Iraq is if the new NDP suffers the same fate as the previous one. The old development plan set out the same broad goals to diversify the economy. The issue is that neither includes a real plan for the government to follow. Instead it just sets a possible direction for the country with some broad benchmarks to reach. More importantly, the government does not base its laws or policies upon the NDP. Each development plan therefore, is simply a recommendation for what Baghdad should do, not what it actually does. For example, the NDPs have called for a huge increase in public investment, yet each budget traditionally commits 60-70% of its funds to salaries and pensions. The 2013 budget only sets aside 38% of its money for investment. Another issue is that Iraq’s politicians only think short-term. They have control of a huge amount of money each year, and want to use it to expand their own base via large patronage networks. That means more government jobs and increasing the role of state-owned enterprises even though that means less money for Iraq’s development. There are few incentives for Baghdad to change its ways, which is another reason why the NDPs are never followed.

Iraq’s economy is in desperate need of diversification. Last year the United States Agency for International Development (USAID) warned that the country was at a crossroad. It could choose to develop its other industries or become even more dependent upon oil. So far, it has followed the latter. That was despite the fact that the previous 5-year development plan called for moving away from the energy sector. That’s because the NDP is put together by the Planning Ministry, but then rarely followed up with any specific policies that could help achieve its goals. Even if it was made official policy there’s no reason for politicians to follow it. The huge revenues that oil generates allow politicians to increase the public sector by funding more and more government jobs to hand out to their followers, and leaves plenty leftover to steal as well. There is little inducement therefore to change, and to make the Development Plan a reality. The country will suffer the consequences as its future will be determined by an oil industry that it has little control over, and politicians who only think about their own selfish goals.

SOURCES

Al-Salhy, Suadad, “Iraq budget battle opens new front in Kurdish feud,” Reuters, 2/15/13

Salman, Raheem, “Iraq five-year plan will attempt to diversify economy,” Reuters, 9/19/13

Tijara Provincial Economic Growth Program, “Assessment of Current and Anticipated Economic Priority In Iraq,” United States Agency for International Development, 10/4/12

Iraq’s Troubled Agricultural Sector

In May 2013 Deputy Agricultural Minister Ghazi Obeidi told the press that Iraq’s farm sector was booming. He claimed that the country would soon be meeting domestic demand for fruits, vegetables, and wheat. Obeidi went on to state that was due to the Agricultural Ministry’s policies, which include the banning of certain imports, and providing new crops to help Iraqi farmers. Agriculture is one of the most important industries after oil and gas. It is the second largest employer, and one-third of the population lives in rural areas. Currently the countryside is suffering from high rates of poverty and food insecurity, which has led to a mass migration to Iraq’s cities. After decades of neglect due to sanctions and wars, agriculture could be one field that with proper development could provide much needed jobs to Iraqis, and stabilize farming regions. Unfortunately, there are major structural barriers to achieving these goals, despite the deputy minister’s pronouncement.

Farmers like this one in Basra face a number of structural and environmental barriers to succeeding (Reuters)

Farming in Iraq has suffered some hard times over the last few decades. It accounted for 23.5% of jobs in 2008, but only contributed 3.9% of GDP. Those figures have been going down as the Agricultural Ministry reported a drop in the number of farmers and areas underproduction in recent years. As a result, Iraq’s agricultural yields are 50-75% lower than its neighbors, and that difference has increased in the last ten years. The United States Agency for International Development reported that crop production in Iraq went up from 2001 to 2002, and then fluctuated before hitting a steady decline after 2005. Using 1999-2001 as a baseline, the country’s output was up 6% in 2005, and then went down by 17% by 2009. That compared to the rest of the Middle East and North Africa that saw a steady increase during the 2000s going from up 1% in 2001 to up 25% by 2009. After the end of sanctions in 2003, Iraq’s agricultural sector should have been freed of restrictions, and had a renaissance. Instead, government and environmental factors have led to its decline. 

Crop Production Index (1999-2001=100)

	2001	2002	2003	2004	2005	2006	2007	2008	2009
Iraq	108.0	129.0	103.0	101.0	106.0	105.0	100.0	81.0	83.0
MENA	101.1	109.5	115.2	117.7	120.6	126.7	122.7	116.2	125.2
Lower Middle Income Countries	102.9	104.7	108.8	113.8	117.4	120.8	124.4	129.5	128.0
World	101.7	101.9	105.1	111.9	113.4	114.6	117.9	122.5	122.2

Rural areas of Iraq are suffering. 39% of the countryside is poor compared to 16% in urban areas. That is a direct reflection of the sorry state of farming, which provides the main livelihood for rural families. The country has been flooded from cheap food imports from neighboring countries like Iran, Turkey, Jordan, and Syria, which Iraqi producers cannot compete with. In 2012, the country bought 50-80% of its vegetables from abroad. One major reason is that the United States removed many tariffs immediately after the 2003 invasion. Another is that Iraqis are using 30 year old farm techniques due to sanctions, and the lingering affects of past wars that isolated them from modern improvements like the use of sprinklers and drip irrigation to new seeds to new equipment. That underdevelopment means that there is huge potential for growth in the industry. Baghdad has talked about jump starting the farm sector to provide jobs and development in rural areas for years, but these policies have largely failed.

The Iraqi government has tried a number of different tactics to help agriculture, but they have not worked. One problem is that not enough money has been budgeted for the Agricultural Ministry. In 2010 it received $1.4 billion for investment, which was below the mark set in the 5-year national development plan. Even with that money, the Ministry’s policies were ill advised. In 2008 it attempted to double the prices it paid to farmers in an effort to boost production. In 2009 and 2011, the government tried banning the import of vegetables and fruits, and in the former year it tried to impose a tariff to raise the cost on cheap foreign farm products. This year, it announced that it would increase the purchase of wheat, barley, and corn to help out farmers, provide them with loans, and assist with new irrigation equipment. So far, none of those policies have worked. The 2009 tariff for instance, was never enforced, and the import bans caused huge price increases, because domestic farmers could not meet demand. Iraq’s water supply system is also inefficient and fragmented. There are three different delivery systems, one in Kurdistan, one run by the central government to the provinces, and one for Baghdad. None of them are coordinated. There are no meters on the system, so there is no way for the authorities to collect fees on users, which means there’s no check on usage. Finally, the government restricts the use of new seeds, fertilizer, and other inputs, all of which are under state control. It takes up to two years to register new seed varieties, and can cost anywhere from $2,000-$3,700, a huge sum for the average Iraqi. The Agricultural Ministry, and others control state-run enterprises that make fertilizer, farming chemicals, and other agricultural products. Those plants are not productive, which cause constant shortages, and the publicly produced fertilizer and other inputs are given to middlemen free of charge who then sell them at very high rates to farmers. All together these are huge hurdles for any rural family to overcome. The state’s policies have often backfired, and hurt farmers. On top of that, the government mismanages the production and distribution of products necessary for their work. All together the authorities have been a hindrance rather than a benefit to the agriculture sector.

An additional issue is the food ration system. Started during the 1990s sanctions, the state-run food distribution system is the largest in the world, and a major impediment to the growth of farming. The rations require huge imports of products that could be produced domestically. In 2012 for instance, Iraq bought 5.4 tons of foreign food products for the system. Those subsidized imports lower prices by an estimated 20%, and undercut domestic farmers. According to the United Nations, Iraqis are less dependent upon the ration system than before, with the exceptions of wheat and rice. In November 2012, when the cabinet proposed ending the rations, and replacing it with cash payments it reversed itself in five days due to political pressure, namely concerns about how the change would play out during the 2013 provincial elections. Not only that, but the system is highly inefficient and corrupt, yet there’s no political will to modify or end it once again undermining farmers.

Regional and environmental factors also impede the development of the agricultural industry. The land of two rivers is getting less and less water from those two giants the Euphrates and the Tigris. Only 3% of the Euphrates and 32% of the Tigris originate in Iraq. In contrast, 68% of the Tigris comes from Turkey and Iran. That means those two upstream countries along with Syria control much of Iraq’s water, and they have been building dams and diverting the water for their own uses cutting Iraq’s supply since the 1990s. There is no cooperation with Iran, Turkey, and Syria over water policy, which means the problem is going to get worse. Within Iraq, demand has gone up, and there have been successive droughts over the last few years. That has meant the country has gone from water secure to water stressed, and the U.N. has warned that it could become water scarce by 2025. Finally, southern Iraq is suffering from high levels of soil salinity. Up to 50% of the cultivated land has salt issues, and the farming techniques used have made it worse. Baghdad has consistently called for talks with its neighbors over the Tigris and Euphrates, but that has gone nowhere, and the other nations don’t seem interested to begin with. Because Iraq is so behind in its farming methods the salinity issue is also going to get worse. Finally, the droughts are natural disasters, which the government has found no solutions to, because it is so inefficient, and lacks the planning to deal with such issues.

Iraq needs a sound government policy if it hopes to save its declining farming sector. A strategic plan needs to be put into place that involves modernizing the industry, loosening state control over inputs, while strengthening limits on water usage, reforming the food ration system, dealing with the cheap imports, and seriously addressing the problems it has with its neighbors. Baghdad has done little of this. Instead it has followed a haphazard approach that is uncoordinated, and often hurts those that it is trying to help. Sometimes it doesn’t even follow its own policies like with the tariff on foreign farm goods. The root cause of these problems is the lack of political will to make any meaningful changes, and a lack of effective planning. That is resulting in the continued decline in agriculture, and the migration of farmers to the cities. That is having a ripple affect upon society by increasing the housing shortage. This is a shame since farming could be a major source of jobs, and a way to diversify the economy away from its dependence upon oil. Farmers simply don’t have the means to overcome all these structural and environmental factors on their own, and until the government gets its act together, and gives this topic the attention it deserves the rural areas of Iraq will continue to suffer.

SOURCES

Adel, Shaymaa, “Iraq imported more than 5 million tons of food last year,” Azzaman, 3/29/13

Al-Aukaili, Khawla, “Iraqi agricultural sector booming, says deputy minister,” Azzaman, 5/14/13

Decamme, Guillaume, “Iraq ration card reform sparks anger,” Agence France Presse, 11/12/12

IRIN, “Less dependent on food rations,” 5/7/13

Kadhem, Adel, “Iraq’s wheat harvest exceeded 3 million tons in 2012,” Azzaman, 2/15/13

Shafaq News, “6,500 acres of Diyala’s farms and orchards threatened by drought,” 3/23/13

Al-Shaher, Omar, “Iraqi Agriculture in Crisis,” Al-Monitor, 1/29/13

Al-Taie, Khalid, “Iraq aims to support local farmers through new proposal,” Al-Shorfa, 4/12/13

Tijara Provincial Economic Growth Program, “Assessment of Current and Anticipated Economic Priority In Iraq,” United States Agency for International Development, 10/4/12

Al-Ukaili, Khawla, “Iraq raises prices of locally produced grains,” Azzaman, 4/17/13

Al-Zubaidi, Hassan Latif, “social welfare flip-flop: why iraq’s ration card can’t be scrapped,” Niqash, 11/15/12

Behind Iraq’s Impressive GDP Growth Rate

Iraq’s economy is noteworthy for its contradictions. Many experts believe that it will be one of the fastest growing economies in the world over the next few years. That’s mostly because of its tremendous oil and natural gas wealth that fuels the entire nation. On the other hand, unemployment, underemployment, and poverty are relatively high. The Gross Domestic Product (GDP) is a perfect example of a figure that appears to show the promise of the country, but upon further inspection shows the large structural problems within Iraq.

Iraq’s economy is expected to expand tremendously over the next few years. The Central Bank of Iraq thinks that the GDP will grow 9.4% from 2012-2016. That would be up from 5-6% growth in 2011. The World Bank said that the GDP would grow 12.6% in 2012, and 10.2% in 2013, while the International Monetary Fund (IMF) predicted 11.1% in 2012, and 13.5% in 2013. The Central Bank stated that it thought the GDP would go from approximately $170 billion in 2011 to $360 billion by 2015. All of this is due to the expected development of the oil and gas industry. It contributes 59% of GDP, and 63% of real GDP. Foreign energy companies working to boost production and exports, new infrastructure slowly coming on line, and continued high prices for Iraqi crude are the major reasons why the Central Bank, the World Bank, and the IMF all have rosy views of Iraq’s economy. The country also needs massive investment in nearly everything after years of wars and sanctions. That adds further avenues for the expansion of the economy.

Since 2003, the GDP has steadily gone up with only one small dip. In 2002, before the U.S. invasion, GDP stood at $20.5 billion. It then dropped to $13.6 billion, because of the war, but then quickly recovered to $25.8 billion in 2004, $31.4 billion in 2005, $45.1 billion in 2006, $57.0 billion in 2007, $86.6 billion in 2008, then declining to $65.2 billion in 2009 because of the world recession, before rebounding to $82.2 billion in 2010. All of this growth was based upon the oil industry. As exports increased, so did the GDP. When exports jumped from an average of 790,000 barrels a day in 2003 for instance, to 1.47 million in 2004, the GDP went up +46.5%. Likewise, when there was only marginal expansion of exports such as from 2006 to 2007, there was a slow down in GDP growth going from +5.9% to +4.1% respectively.

Year	GDP	Per Capita GDP	Real GDP Change	Oil Exports (Mil/Bar/Day)
2002	$20.5 bil	$802	-7.8%	1.3
2003	$13.6 bil	$518	-41.4%	0.79
2004	$25.8 bil	$951	+46.5%	1.47
2005	$31.4 bil	$1,124	+3.7%	1.36
2006	$45.1 bil	$1,568	+5.9%	1.50
2007	$57.0 bil	$1,926	+4.1%	1.66
2008	$86.6 bil	$2,845	+9.5%	1.84
2009	$65.2 bil	$2,087	+4.2%	1.90
2010	$82.2 bil	$2,564	+0.8%	1.89
2011	$170 bil est.	$5,342 est.	+5.6% est.	2.16
2012	$128.1 bil est.	$3,808 est.	+12.6% est.	2.41

The aggregate numbers for Iraq’s Gross Domestic Product hide the large inequalities within the country. First, oil and gas are capital-intensive industries that provide little employment for Iraqis. Only 1% of the workforce is employed in the energy sector. Instead, oil revenues are distributed throughout society through the government. In 2012, it was one of the largest public employers in the world providing 60% of full time work. That percentage was higher in the Kurdistan Regional Government. As oil has expanded, so has the number of government workers going from 28% in 2005 to 43% in 2008 of the entire workforce. The vast majority of these workers do little to no real work. For example, former Planning Minister Ali Baban said in 2010 that 70% of public employees were unproductive. In comparison, agriculture and manufacturing have declined since 2003 due to the repeal of tariffs by the Coalition Provisional Authority, the lack of reliable electricity, and the inability to compete with foreign products, which are heavily subsidized, such as Western wheat and barely. Even with that huge expansion, unemployment is still officially at 11%. Not only that, but those families that do not have a relative in the government are more likely to fall into poverty, because they lack a steady income and pensions. It is one reason why the government poverty rate is still high at 17%. That doesn’t mean private employment hasn’t grown in recent years, but again, that’s largely due to outsourcing by the government. That too has problems as many employers look towards foreign workers, because of their cheap wages, and to make up for the loss of domestic professionals due to a massive brain drain that has happened since the 1990s. Finally, the government is not helping the situation. It is pushing the oil industry as the means to expand the economy, and despite its many promises to diversify and privatize, it is enlarging the state sector instead. These many problems are what the GDP numbers do not reveal. Yes, the figures for Iraq’s economy are going up dramatically, but that does not mean that they are actually helping the majority of the population. If the end result of Baghdad’s policy is the hope for families to have a relative in the public sector who does little actual work that does not make a productive society.

Iraq’s GDP is just one example of where the numbers do not reflect the full reality of what is going on in the country. The expansion of the oil and gas industry with the help of foreign energy companies is driving economic growth. That is benefiting the entire population, but not as much as the figures would have one believe. Money is trickling down, but through the inefficient government with public sector jobs and contracts for private companies. This has given rise to increasing wages, but the vast majority of government workers do nothing, and Baghdad is using its oil revenue to expand the state rather than diversify the economy, which would do a much better job of raising the standard of living for all Iraqis. Until these structural problems are addressed, Iraq will have a fast growing economy, while still dealing with massive disparities.

SOURCES

Adel, Shaymaa, “Iraq reports plunge in poverty and unemployment levels,” Azzaman, 5/5/13

Cordesman, Anthony, “The Changing Situation in Iraq: A Progress Report,” Center for Strategic and International Studies, 4/4/09

Dunia Frontier Consultants, “2011 Year in Review, Foreign Commercial Activity In Iraq,” March 2012

Inter-Agency Information and Analysis Unit, “Iraq Labour Force Analysis 2003-2008,” United Nations Office for the Coordination of Humanitarian Affairs, January 2009

O’Hanlon, Michael and Campbell, Jason, “Iraq Index,” Brookings Institution, July 2012

Peel, Michael, “Iraq faces uphill battle to rebuild,” Financial Times, 5/9/12

Reuters, “Iraq sees at least 9.4 percent GDP growth to 2016: central bank,” 2/19/12

Tijara Provincial Economic Growth Program, “Assessment of Current and Anticipated Economic Priority In Iraq,” United States Agency for International Development, 10/4/12

Yousif, Bassam, “Aspiration and Reality in Iraq’s Post-Sanctions Economy,” Middle East Repot, Spring 2013

- “The economy of Iraq since 2003-a follow-up,” Indiana State University Economics Department, August 2012